Financial planner advises Canadians to sell their cottages

By Bill Mann

It’s a Canadian tradition this upcoming Labour Day weekend: Time to close up the cottage in the country and prep it for the long winter ahead.

Rural cottages “up north” are an item of faith to many urban Canadians — which is most of them — much like dachas are to Russian city slickers. Americans, I’ve observed after living in both places, aren’t quite as cottage-fixated as Canadians.

But a Toronto investment pro is telling Canadians they should consider (gasp!) selling their cottages.

In the few years we lived in Quebec, my wife and I fell prey to the Canadian buy-a-cottage habit, purchasing a two-bedroom prefab 90 minutes from Montreal near the small rural hamlet of Rawdon, Quebec. We spent several pleasant, laid-back summers up there, sharing a private lake with our neighbors, most of whom were German immigrants living in Montreal who worked at Siemens Electronics.

The place was a steal by today’s standards — $5900, including a quarter-acre of land.

Time to “pipe up”

But we made a big error of omission most Canadians won’t make this week: We forgot to winterize the place properly. One has to drain every drop of water from the pipes — as we found out belatedly.

That first spring, all our pipes had burst in the winter cold. The toilet had split right in two. We had to have all our pipes placed overhead — so they’d drain completely around Labor Day when we cleared out.

But broken pipes aren’t one of the reasons financial planner Ted Rechtshaffen cites in his recent piece in the Toronto Globe and Mail titled “Four Reasons to Sell Your Cottage Now.”

Rechtshaffen, president and CEO of TriDelta Financial in Toronto, says in his iconoclastic piece, “The more clients I talk to, the more I hear people complaining about the upkeep and the cost of cottages, the family squabbles and estate tax issues. There must be a better way.”

He cites four reasons for selling and then renting a cottage instead:

1. All the work and upkeep cottages require (see personal narrative above).

2. By renting, you’ll find a cottage that’s more age-appropriate (i.e., a cottage that’s great for thirtysomethings may not fit grandparents).

3. Not owning a cottage frees you to travel anywhere — and rent a cottage in a different locale. You don’t feel obligated to stay in the same area every summer.

4. Finally: “No more freeloading friends and family to worry about. Cottage owners know that inviting family and friends is a wonderful idea, but can often be taken advantage of. You can still invite people up to a rented cottage, but it no longer becomes someone else’s annual vacation destination.”

The Toronto financial planner adds: “I haven’t even touched on the estate planning problems that can tear families apart.” (Our former neighbors near San Francisco provided a perfect example of this: A bitter fight over an inherited cabin at Lake Tahoe turned into an expensive legal battle that lasted for years).

Rechtshaffen concludes: “If you are reading this at your cottage right now, don’t forget to turn off the water and adjust the thermostat before you leave.”

We didn’t have a thermostat at our place in rural Quebec. But we DID turn off the water. We just didn’t drain all of it out of the pipes. Big, expensive mistake.